DRIS

[Snowbadger]

Evening All,
what is the tax position of the re-invested divs? Do you have to wait 5yrs for each individual payment to comply?


Cheers,

SB

[scotia]

Evening All,
what is the tax position of the re-invested divs? Do you have to wait 5yrs for each individual payment to comply?


Cheers,

SB

Yes - each DRIS purchase must be held for 5yrs before it can be sold if you wish to preserve the initial tax rebate.

[oxmatt]

However, IIRC they don't trigger the 6 month rule so you can still sell other holdings in the same VCT that are over 5 years old within 6 months of receiving new shares through DRIS.

[Snowbadger]

Thanks for the prompt replies. I thought that was the case but just wanted to check for an in law who wants to mitigate Thursday's tax increases.He was advised to go DRIS by his accountant. As I am retired I am happy for the tax free income stream, however if I wasn't I am not sure the extra paperwork and dealing fees on maybe 6-7% of the initial investment would be worthwhile.

Cheers,

SB.

[Seasider]

I don't remember paying dealing fees on a DRIS. And you can sign up for it online if you are registered with the registrars of the VCT. Of course, it was few years ago that I did this so maybe it is different now.

[Snowbadger]

Hi Seasider,
I presume you don't pay any dealing fees when a divvy is DRISSED back into the VCT. i was thinking at some stage you would have to sell or do a buyback for some pretty small sums, as at the point of disposal of the original investment you would still have up to four or five years to hold the relevant dividend payments if Scotia is correct.

Cheers,

SB ( Also a Seasider as I'm a Blackpool fan).

[scotia]

Usually DRIS shares are issued at NAV with no dealing charges. In the past some VCTs issued DRIS shares at a discount below NAV - but I don't think there are any that do this now.
And yes, if you join a DRIS scheme, but sell your main holding after 5 years, then you are left with a collection of (usually) small amounts of DRIS shares. And if you sell each of the (small amounts) of DRIS shares at the end of their 5 year term, then you will possibly face dealing charges which will be significant compared to the value of the shares.